What happened
Shares of Chinese cloud computing service provider Kingsoft Cloud Holdings (NASDAQ: KC) are lower by 43.7% as of 11:36 a.m. ET on Monday in response to a downgrade from an analyst at J.P. Morgan. The sell-off, however, merely extends what's become a long-lived, steep pullback.
So what
It's not exactly the surprise of the century. Kingsoft had already been on the receiving end of several downgrades since September of last year, driving the stock down 93% between last February's peak and Friday's close. Monday's 32% drubbing only extends that losing streak and, incredibly, isn't the worst single day shares have suffered of late.
The specifics: A J.P. Morgan analyst lowered his view of this cloud computing outfit from neutral to underweight, cutting its price target from $8 per share to $3.50. Still, that target is above Kingsoft's current price near $2.75.
Now what
It's not exactly a stretch to suggest this stock's sell-off -- and the downgrades helping drive it -- has taken on a life of its own, which isn't terribly unusual for a low-float, low-priced stock (Kingsoft Cloud Holdings' market cap is now a mere $727 million). China's continued crackdown on its technology companies and the prospect of the conflict in Ukraine spreading to other corners of the world may also be weighing on investors' minds. Kingsoft is one of those marginal, unprofitable names that's readily sold at the first sign of trouble, and this isn't exactly the first sign of trouble here.
Image source: Getty Images.
Investors keeping tabs on this company will likely know that, while Kingsoft is still unprofitable, revenue has been growing and its losses have been shrinking. Analysts are calling for more such progress this year and next. Plus, despite the J.P. Morgan downgrade, the analyst community's consensus price target near $113 is still miles above the stock's present price.
There's just too much lingering uncertainty, however, for most investors to tiptoe into this speculative name ... at least as things stand right now.
10 stocks we like better than Kingsoft Cloud Holdings Limited
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Kingsoft Cloud Holdings Limited wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of March 3, 2022
JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. James Brumley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
